‘Britishness’ gives UK luxury brands an advantage in emerging markets

Cultural icons such as David Beckham and the Royal family help the UK’s luxury brands outperform its global rivals in emerging markets, new research has found.

A survey of Chinese consumers in Shanghai, Beijing and those that travel thousands of miles to the UK to shop at places like Harrods, Harvey Nichols and House of Fraser, found that ‘Britishness’ was an important reason they chose to buy brands like Johnnie Walker, Aston Martin, Rolls Royce, Burberry and Gieves & Hawkes.

The study was conducted by Professor Qing Wang of Warwick Business School in the UK, and looked at the emerging ‘new rich’ segments in China, India and other emerging economies are a huge market that luxury brands are targeting and preliminary research has found that Britain’s cultural capital represents a number of unique qualities that is difficult for competitors in France, Italy or the US to imitate.

When asked what the Chinese consumers associate with Britishness, not surprisingly, the Royal family came top of the list, followed by David Beckham, the Premier League and the 2012 London Olympics.

TV programs and movies such as Downton Abbey, the Harry Potter films, Sherlock Holmes, James Bond and BBC News also had a huge influence on the Chinese perception of Britishness, and so does the British elite education system represented by Oxbridge and the public schools.

Professor Wang, who will be presenting the preliminary findings of her research at The Geography of Luxury: East, West and Global Directions conference at University of Warwick this week, says, “Luxury goods are defined as those satisfying hedonic rather than functional needs and our research has found this is an area that Britain enjoys a distinct advantage in.

“A very important factor that makes Britain standout is that it incorporates tradition and innovation seamlessly.

“Put differently, Britain’s advantage lies in the so-called soft power, which is defined as the ability to get what you want through attraction rather than through coercion and cultural heritage is a key part of that. The extent of its impact is hard to measure and even harder to replicate. As China promotes its own soft power, it has increasingly turned to Britain for inspiration.”

The love of British luxury goods in China and other emerging markets is demonstrated by sales figures. For example, Diageo derives about a third of its profits from scotch whisky brands, driven by demand in China, India and Russia, making Diageo the world’s biggest scotch whisky producer.

Jaguar Land Rover, the UK’s leading manufacturer of premium luxury vehicles, saw sales in China up 39% in January 2014. Similarly, annual revenues at Burberry hit GBP£2 billon for the first time in 2013 thanks mainly to sales in China jumping 20% year on year, with the fashion retailer set to open eight more stores in the country this financial year.

Navdeep Athwal, a colleague of Professor Wang, found in a separate study, which will also be presented at the conference, that the lure of luxury spreads into other consumer segments: “There is a trickle-down effect from the tailor-made luxury product segment with high price tags and exclusivity benefits to other consumer segments where more affordable and mainstream luxury goods are offered,” says Athwal.

“Members of luxury goods consumer-led virtual communities seek to emulate the behaviour of their elite counterparts and to gain the same levels of status and recognition.”